Masterclass Notes on Radio Advertising
Introduction
Companies buy reach instead of a number of spots. This reach represents the number of listeners at a given moment, such as during rush hour. The number of spots does not matter if the reach is low. You have gross reach, average contact frequency (GCF), and Net reach. Net reach refers to the number of unique listeners, while gross reach does not distinguish between them. The GCF measures how often a listener hears a spot.
Example Calculation
$Gross = 2.583.958$
$GCF = 4$
$Net = \frac{Gross}{GCF} = 645.989,50 \approx 645.990 \text{ Unique listeners}$
Understanding GRP (Gross Rating Point)
Radio stations use Gross Rating Point (GRP), which works with target groups and percentages. A GRP of 5 means that 5% of the target group was reached. This can be filtered by age, gender, country, etc., with age being the most common filter. GRP adds up, so Net listeners do not matter. For example, $2 \times 5%$ GRP simply becomes 10% GRP.
Important Considerations
- Average Contact Frequency: Always pay attention to the GCF.
- Target Groups: Some age groups are more difficult to reach.
- Campaign Duration: Longer campaigns may be necessary for less popular stations.
Data Sources: National Listening Survey (NLO)
The National Listening Survey (NLO) provides data on the number of listeners to major radio stations. NLO participants maintain a diary every fifteen minutes over two months, noting which station they listen to.
Key Statistics
- 15.000.000 listeners monthly to large radio stations.
- Market share is recorded as a percentage of listeners aged ten years or older.
Choosing the Right Station
To advertise effectively, assess the most cost-efficient way to reach your target group. Many advertisers mistakenly choose stations based on assumptions rather than data.
Campaign Pricing Factors
Basic Annual Price (BJP)
The BJP represents how much you will pay per year for a basic number of spots. Discounts may apply for bulk spot purchases.
Spot Length
Radio stations base prices on a standard spot length of 20 seconds. Prices adjust in increments of 5 seconds for shorter or longer spots.
Monthly Rate Example
$BJP = 200 \text{ euros}$
$\text{Spot length} = 35 \text{ seconds}$
$Index = 175 \text{ euros}$
$\text{Monthly rate} = 175 \times 200 = 35.000 \text{ euros per month}$
Advertiser Packages
Advertiser packages offer different conditions such as priority in scarcity situations, and how quickly reach can be used (distribution).
Example: GRP Target
Suppose you want a GRP of 3.5 million people in a month on NPO Radio 2. With distribution, you can limit the campaign to stop once that GRP is reached, avoiding unnecessary extra costs.
Time Slots and Indexing
Time slots indicate when something is broadcast during the day (e.g., 6-24, 9-14). Some companies calculate these as a separate index.
Target groups also determine the price. Factors such as demand, supply, and size influence the cost.
Market Index
Radio stations use a market index to balance supply and demand. Prices may fluctuate based on demand and availability.
Monthly Index
The monthly index tracks how much spot time costs each month. For example, advertising costs may rise during holiday months due to increased demand.
Additional Options
Some packages include additional options, or they may be billed separately:
- Preferred Positions: Your preference for spot position (e.g., last, first).
- Roadblocks: A group of channels plays a spot simultaneously.
GRP Price Calculation
The GRP price is calculated by multiplying the following factors:
$\text{GRP price} = \text{BJP} \times \text{spot length index} \times \text{package index} \times \text{time slot index} \times \text{target group index} \times \text{market index} \times \text{month index}$
Conclusion
All radio stations use fixed costs per spot rather than GRPs, derived from second rates. For companies that prefer not to delve deeply into GRP mechanics, second rates may be the best choice for maximizing reach.